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MTS Systems Corporation to buy sensors group PCB

Last updated: 12:29 06 Apr 2016 EDT, First published: 07:29 06 Apr 2016 EDT

M&A
It will take a while for the merger to enhance earnings

Sensors specialist MTS Systems Corporation (NASDAQ:MTSC) is to splash out $580mln on sensor producer PCB Group.

PCB was described by MTS as a global leader in the design, manufacture and distribution of sensor technologies that both enhance the performance of its customers' products, and enable those products to enter the market more rapidly and reliably.

Should the acquisition go ahead, the sensors business of MTS will merger with the PCB business, though the brand names of each will be retained.

MTS expects to immediately realize annualized revenue synergies of between $20mln and $30mln from the acquisition, with a further $5mln to $7mln of synergies generated over the next three to four years.

MTS expects to incur around $31mln to $36mln of non-recurring transaction-related expenses over the next 24 months, with an estimated $27mln to $29mln occurring in fiscal 2016, and the remainder to be incurred over the following 18 to 24 months. Excluding these non-recurring charges, the transaction is expected to be accretive to earnings by fiscal 2018 and, on a cash basis, which excludes transaction related intangible and financing expense amortization and non-recurring items, it is expected to be accretive in fiscal 2017.

The prospect of jam tomorrow did not sit too well with the market, which marked the shares of MTS 10% lower.

 

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